U.S. Workers’ Discontent with Compensation

By Michael S. Derby

NEW YORK (Reuters) – U.S. workers are growing increasingly dissatisfied with their employment compensation, according to a survey released by the New York Federal Reserve on Monday.

In its Survey of Consumer Expectations Labor Market Survey for July, the regional Fed bank reported that as of last month, “satisfaction with wage compensation as well as with non-wage benefits and promotion opportunities at respondents’ current jobs all deteriorated.”

As of July, 56.7% of respondents expressed satisfaction with their pay compared to 59.9% in July 2023. Benefits satisfaction fell to 56.3% from 64.9%, and satisfaction with future career advancement decreased to 44.2% from 53.5% in the same timeframe.

The declines in satisfaction were particularly notable among women, individuals without college degrees, and those earning under $60,000 annually.

Additionally, the survey recorded a slight increase in job change intentions, with 11.6% of respondents in January planning to seek new employment, up from 10.6% in July 2023.

A record-high 4.4% of respondents anticipated job loss, compared to 3.9% a year prior, alongside an increase in those expecting at least one job offer in the next four months.

The report also discussed the concept of the reservation wage—what job seekers indicate they would require to accept a job. This figure has surged in recent years due to tight labor markets and inflation.

The reservation wage was $81,147 in July, slightly down from $81,822 last quarter but significantly up from $78,645 in July 2023. Conversely, expected salary offers for new jobs dropped to $65,272 from $67,416 a year ago.

The New York Fed noted that while the rise in reservation wage appears significant, it is more moderate when accounting for inflation. Although the wage has risen by 31.4% since March 2020, it is only up 8.2% when adjusted for inflation, having declined in real terms in the four years preceding the pandemic.

“This shows that even though part of the increase in respondents’ reservation wages is due to inflation, there has still been a rise in the minimum compensation respondents require to accept new job offers in real terms,” wrote New York Fed economists. They added that the real terms reservation wage has stabilized and remained essentially flat since early 2021.

Workers’ escalating discontent regarding compensation and job opportunities coincides with decreasing inflationary pressures and an increasing unemployment rate.